Automotive supplier survey 2018

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otive Supplier Survey 2018

In cooperation with the Automotive Industry Association of the Slovak Republic and the Slovak Automotive Institute, PwC surveyed the current situation, key factors and the future expected development in the automotive supply segment in Slovakia.

Most automotive suppliers expect a revenue increase of more than 5% this year and significant technological investments over the next 3-5 years. A quarter of respondents are considering the relocation of additional production to Slovakia, and nearly half of them expect an increase in staff numbers in 2018.

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Jens H?rning PwC | Partner | Audit PwC CEE Automotive Industry Leader Mobil: +421 903 451 242 E-mail: jens.horning@

Dear Friends and Business Partners,

Globalisation continues to support technological developments, including big data topics and digitalization. Industry 4.0 is connecting value chains around the world, while political developments may have adverse impacts on global trade. Just as technology is impacting operations, political decisions such as customs regulations and the establishment of trade barriers is making it harder to predict business opportunities. This is why strategic decision-making is likely to become even more of a challenge for global business leaders.

Slovak CEOs currently have strong confidence in economic growth and in the success of their companies. They have a high degree of trust in their business and capabilities. Slovak CEOs and global leaders are alert to the challenges of technological transformation.

Digital transformation requires new skill sets, and the importance of HR management continues to increase. The ability to recruit the best people and to retain the talent organisations want to keep remains a priority. Dealing with these topics goes beyond discussions about salary levels, which are already becoming more and more of a challenge for the automotive sector in Slovakia. It is also about dissatisfaction with the quality of education in Slovakia and the relevance of science for the industry including the automotive sector.

2017 was another year of success for the Slovak automotive industry and going forward, the impact of the automotive sector on the GDP of Slovakia will continue to grow. The pipeline of new models made in Slovakia is robust, and future success will depend on the ability of the country to adapt. PwC expects that the transformation of the automotive industry will accelerate, driven by several factors: electrification, autonomous driving, car sharing, and ongoing connectivity and there will be many challenges and opportunities.

This is the sixth Slovak Automotive Supplier Survey, whose results were published in May 2018. Slovak automotive suppliers remain positive about the business environment and investors continue to be confident. The competition continues to be high and productivity needs to match costs. We hope you will find the survey interesting reading. This year, the analysis also includes the results of PwC surveys conducted in Hungary and Austria, and features information about the differences and similarities in these countries. I feel certain you will find the results useful and that they will add value to your business.

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Automotive Supplier Survey 2018

For the third consecutive year, the Slovak automotive industry produced more than 1 million automobiles, which confirmed the current stability of this industry in Slovakia. In April 2017, the 10,000,000th passenger car came off the production line in Slovakia. The perspective of further growth is supported by the plans for a fourth automobile producer, which should start its operations in Nitra at the end of 2018, and the positive effects of this production should be felt in 2019. However, the automotive industry needs to look further ahead, and to continuously evaluate the specific factors impacting internal and external competitiveness.

The Automotive Industry Association of the Slovak Republic and PwC have long cooperated in undertaking the Automotive Supplier Survey. I firmly believe that this activity is beneficial, as it brings us useful information about fundamental issues regarding the supply chain in Slovakia and its development over time.

This year?s survey is focussed more on training and education of the workforce which is, due to the absence of a system for transferring scientific and technical knowledge into practice, the basis of future competitiveness of the automotive industry and industry as a whole in Slovakia. It is well understood that the industry cannot prosper in the long term without a sufficient number of skilled people willing to work and create value. The Automotive Industry Association of the Slovak Republic has long been part of initiating change in the education

system. We have been engaged in developing legislation on vocational education and training, and the introduction of dual education. After two years of experience with its implementation in practice, we are cooperating on amending the legislation on dual education. Based on practical experience, it is clear changes are needed, and they should support a more robust implementation of the dual education system in Slovakia. Our interest is to improve the quality of secondary vocational education system and to better prepare its graduates, and we want to increase the employability and practical preparedness of higher education graduates. In cooperation with selected universities, we have started to develop study programs which will be closer to actual practice and should ensure that university graduates have practical experience and are immediately ready to start work in the industry. Revolutionary changes in automobile construction and production processes, the utility properties of automobiles, and related services necessitate changes as regards the competencies and structure of university graduates, particularly in the technical and natural sciences. Only graduates that have been trained and educated in line with the latest knowledge and practical needs will be able to cope with digitalization and the requirements for the development of modern transport systems. Similarly, the need for research and development activities, particularly in the supplier industry, faces a lack of qualified experts as well as graduates ready for creative work and innovations. This is the irreplaceable task of higher education.

The task of the academic community is also irreplaceable as regards research and development. It is our obligation to support the creation of an environment suitable for cooperation between the industry and scientific institutions to jointly solve the problems of the industry. Our scientists are aware they are also responsible for the future of the industry in Slovakia, and for sustainable economic growth. Nevertheless, the established rules may mean there is a lack of motivation as regards the much needed cooperation with industrial practice.

This is the reason why the latest automotive industry survey is focused on higher education. Together with PwC, we sought to initiate a discussion on cooperation between industry and universities and on the current situation, possibilities and ideas of the industry to change the present situation and initiate a change. We are pleased that major automotive companies in Slovakia have joined this discussion, and helped us obtain a great deal of valuable information about the current relation between the industry and the universities ? how the industry sees the universities, and what barriers the industry faces. The survey results provide much food for thought, and I hope they will help us find optimal solutions when setting conditions so they will be sufficiently motivating for both parties to become engaged in mutually beneficial cooperation and projects, whether in education or applied research and development.

Alexander Matusek President of the Automotive Industry Association of the Slovak Republic

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Contents

Analysis of 2017 company results Supplier`s plans for the future Human resources challenges Cooperation with schools Innovations, development and technologies Structure of survey respondents

The automotive industry must focus on continuous innovation and cooperation with schools

52%

Suppliers with significant investments in new technology & digitalization in 3-5 years

94%

Suppliers report lack of labour resources in the market

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